The real stories from inside the F1 paddock

A quick catch-up

The big news of the last few days came from Geneva late last week when David Campbell, the CVC-appointed head of Allsport Management, left his role at Allsport management after just over a year. He had taken over to replace Patrick McNally. Allsport oversees trackside signage, official supplier deals and “The Paddock Club”, F1’s VIP hospitality operation. Campbell joined Allsport after a career which involved working for Richard Branson’s Virgin Group, being group chief executive at Chris Evans’s Ginger Media Group, running the Ministry of Sound and later the London Tourist Board. He joined the Anschutz Entertainment Group (AEG) in 2005 and made his name by turning the Millennium Dome into The O2 entertainment facility, which opened in 2007. It was clear from quite early on that Campbell and Ecclestone were not a good combination. The word is that the most likely replacement is Australian Judith Griggs, who is currently the Chief Operating Officer at Allsport. She has been involved in Formula 1 since 1985 when she worked as a lawyer for the inaugural Australian GP in Adelaide. She was then hired by Ecclestone and transformed his business operations in the late 1980s. She then returned to Australia to become the CEO of the Australian GP in Melbourne before returning to Europe 12 years ago to work with McNally.

Meanwhile there are hints of change to come at Ferrari where Luca di Montezemolo is now actively building up his centre-left movimento called Italia Futura (IF), which he is transforming into a political party in the run-up to the next Italian general election which will be in 13 months. Montezemolo has the advantage of not being seen as a politician in a country that is fed up of its political classes. At the moment the country is being run by the unelected economist Mario Monti. He leads a government of technocrats that was put together to save Italy’s economic situation and is supported by the political parties, largely because they are worried about going to the polls. Montezemolo is hoping to sweep into the vacuum with a party untainted by the old faces and old ideas of Italian politics. He is currently recruiting and a number of his people come from the Formula 1 world: notably Simone Perillo, who was head of FOTA, but is now in charge of Institutional Relations at IF. Another name that has popped up is that of Manfredi Ravetto, who was working with Colin Kolles to try to put HRT on the right track before the Spaniards decided to do their own thing. He has been appointed the head of Italia Futura in the Veneto region.

The testing in Barcelona failed to reveal much with six-tenths of a second covering the first 14 drivers. Kimi Räikkönen was fastest of all in the Lotus-Renault with a best of 1m22.030s, while Mark Webber was 14th quickest in the Red Bull, with a best of 1m 22.662s. Between the two were Sergio Perez (Sauber), with a 1m22.094s; Jenson Button (McLaren), 1m22.103s; Daniel Ricciardo (Toro Rosso), 1m22.155s; Fernando Alonso (Ferrari), 1m22.250s; Bruno Senna (Williams), 1m22.296s; Nico Hülkenberg (Force India), 1m22.312s; Kamui Kobayashi (Sauber), 1m22.386s; Felipe Massa (Ferrari), 1m22.413s; Lewis Hamilton (McLaren), 1m22.430s; Paul di Resta (Force India), 1m22.446s; Romain Grosjean (Lotus), 1m22.614s and Heikki Kovalainen (Caterham), 1m22.630s.

Elsewhere two motor racing figures have died in recent days. Peter Agg,a Formula 1 team owner, albeit briefly, in the 1970s, has died at 82 and Robert Fearnall, a key figure in the history on Donington Park, has died at 57.

Agg used some of the wealth from his family’s wine business to buy the right to sell Lambrettas in the British market and from there went on to acquire the Trojan car company and the licence to sell Heinkel Bubble Cars in the UK. In addition he bought the Elva sports car company and began to manufacture customer racing cars for McLaren. Later Trojan took on Ron Tauranac, who had just left Brabham, to design a Trojan T101 for Formula 5000. The first of these appeared in March 1973 and several were raced in Formula 5000 that year, notably by Jody Scheckter, Bob Evans and Keith Holland. The Trojan T102 followed for Formula 5000 in 1974 and the T103 was a Formula 1 car – which was run in selected Grands Prix that year with Tim Schenken driving. The timing was bad because of the Oil Crisis and the team closed after just a season. The Trojan company did, however, manufacture around 200 McLarens over a 10-year period.

Fearnell started his career in racing as a journalist with Autosport magazine but then moved on to become the Press Officer at Silverstone and to co-drive James Hunt on the 1973 Tour of Britain. He then became associated with Donington Park, helping Tom Wheatcroft to revive the circuit from 1979 onwards. He would later became managing director and eventually took over all of Donington’s promotion with his Two-Four Sports company.

My wife and I used to go to dinner dances in the 1980’s at Peter Agg’s house, Effingham Park (now a hotel), near East Grinstead. The ballroom had a wonderful collection of historic racing cars round the edge, including things like a Birdcage T61 Maserati, a 917 Turbo Porsche, a Vanwall and loads of other cars. Not being a big fan of dancing, it was one of the few venues I was very happy to go to.

This is a very significant and responsible position, (moneywise) I wonder why Bernie did not take control of Allsport directly, I suppose he had sufficient input in it’s day to day running and originally put McNally on the right path, leaving no challenge.

Unless dramatically apart, the testing times mean very little unless we know all the fuel loads and tyres and tyre life point. No doubt someone notedall these or guessed. Red Bull are reckoned to be well ahead again this year by most observers, but you wouldn’t draw that conclusion from Webber’s time here, so it just goes to show, or not.

Ahh, Lambretta! Imperial Way Croydon, my wife worked there in her teens, I worked in the next road, Commerce Way, at Philips.

Used to love Donnington, you could walk the whole way round the outside of the track there. Has it recovered to proper working status after the F1 debacle? (on the good one that was held there years ago but the recent one that wasn’t) (which I always thought was just a means of pressure on the BRDC).

rpaco, not bad idea to think about transfer pricing in context. Or maybe just it helps (is necessary) to have independent calls on forward valuations. But i think the strong reason in advertising is not to have conflict – what BE does often treads on others’ toes.

Lastly, too many cooks. I have never, but I have known people deal with Allsport. If you have two very differing styles, it’s a difficult thing to be in partnership. Sadly I never found out the rest of that story personally, but it is not unusual to have one person take a overarching opinion and steal any common ground. I look back on my happier days with my late partner as more performance art than business. But probably I would have eventually smothered the good my partner brought. So I am a firm believer in independent states, now. Align, yes; merge, no. ‘Least not until the business becomes corporative.

Since Joe’s travel has calmed me down!!!! (joke, honest guv) I was looking about, and came across (through obvious prominent channels, hardly effort) a quite interesting read on how GOOG solves these problems. I have a lot of issues with what I read of it, but it’s really quite a good write up:

Also passing is Selwyn Hayward the founder and owner of Merlyn Cars (Colchester Racing Developments), and ironically the man who gave Tim Schenken the FF chassis in which he made his name. Anyone recall the advertising campaign, “Ssshhh!” and “Ssshhh, again!”
The list of Selwyn’s stars is long and impressive and includes Emerson Fittipaldi, Jody Scheckter and many others.

A bit off-topic, but with the launch of the new HRT today, I was wondering what the future holds for Cosworth? If I remember correctly, they needed 3 teams to make things work financially, but now they are down to 2 (HRT, Marussia).

Also, any news on Pure? They were in the news with the hiring of the FIA guy (maybe Simon?)
I suppose a lot will depend on the teams’ decisions with the new generation of engines, but with Mercedes and Renault covering a lot of the teams, is there any room for Pure, Cosworth, or any others like a Volkswagen?

Re the Trojan T101 F5000 and Jody Scheckter: it was with this car that overnight-sensation Jody demolished the competition (including Brian Redman and Mark Donohue) in the first half of the 1973 L&M season stateside, part of his set-the-world-afire first year in the big time. What a well-crafted article, Joe you are 10-10ths a journalist.

I would add an additional update, if this is the proper forum. Am troubled to see that the New York Times has dropped Brad Spurgeon’s blog from it’s blogroll. I enjoyed his reporting for The Times very much. Somewhat confusing is the fact that you can still get to the blog through the International Herald Tribune. This seems pertinent to you, Joe, since you have a link to Spurgeon’s Times blog in your blogroll.

This story surfaced in today’s papers in Australia and it looks like CVC needs to do something to make the books look healthier.

According to the article:

Australia’s largest sports and entertainment ticketing company, Ticketek, and the Allphones Arena will be put on the auction block as the private equity operator CVC Asia Pacific looks for ways to get a $2.7 billion debt monkey – and two hedge funds – off its back.

It could just be scheduled, you simply do not know what the limited partner contracts say. They (the LPs) may have their own thresholds to sell for cash, and CVC simply comply. CVC is a manager, not principal.

If I may be permitted, I recently found a very engaging read focused on Australia, because that is where the bloke is engaged, and this whole other John has some highly pertinent comments on private equity distortions here:

So what I am saying is somewhere between “our not to reason why” and “meh, why does it have to affect F1?” Your guess is as good as mine or anyone’s.

Having dived into that blog, albeit sure it’s to in some way help sell big investments to who has it, it’s refreshingly straight, not been able to spot a single hype up or dope down. Oh, right, written by an Australian, that explains it!

My understanding is that CVC, having leveraged Nine, extensively, to pay James Packer for the group are now finding that:

1. Running a TV station isn’t as easy as they thought.
2. All the other stuff that was under the Nine banner isn’t performing as brilliantly as they expected.
3. Now find themselves looking for a truckload of cash and are unloading assets.

Ultimately people only give CVC money to manage if CVC provide better returns than they can get anywhere else.

At the moment it looks like CVC isn’t having a good time of it and while there are corporate circuit breakers in place; too big a hit in one division will impact the others.

Now if we all chip in a few dollars each maybe we could by F1 from CVC…

Yup, leverage in a no downrate is not funny to price. And I totally agree you have to have some clue about the business. You can wildly overpay and make it work, if you got the balls and nous. So I think you are likely right.

But for fun and giggles, I run a tiny tiny LP, and just “fired” a limited partner, took a put i had (because it was a very short term deal, to be honest, if they have easy out, so do I), because I feared they would hit a credit event and start panicking, ask to liquidate at inconvenient time, cause distraction, risk disorder. So I got ahead of the possibility. Cannot be more specific, but the worst thing ever for a manager is to have a cash crunch.

Some managers have a requirements to keep a cushion, overall, to cover redemptions. (wrong terminology, mixing up different specialties

, but idea the similar) A bucket load of ways a sale can be triggered. Thankfully I am doing this in a microcosm you need a scanning electron microscope to see. My LP stands for “Little Petri dish”, a very personal baby.

I think the whole PE world (which is not my world, by the way) are facing the up rate, and boy will that sting. If you leverage hard and book NPV (Buffetism “there are some things you do in private”) on such insane nearly free money, bringing in new investors on that expectation, taking your fees off of to be honest fudge money, you not only deceive the viability of the management, but also strip years to decades of future income from the company for the book gain. Unlike Buffet, CVC and their ilk cannot take thrown off cash from a good acquisition and sort the other, they are pass through, effectively.

Very unhappy place to be, for the held company. Anyhow, I’ll offer a few bucks if you’re in. 50:50 fella! It’s not the equity value, it’s now the refi.

Just thought to translate me using formal expressions above, for “liquidity event” in my little world means someone facing messy divorce. Not having any bit of my outfit argued over. Don’t think i’m being indiscreet about what’s pretty normal. But sucks for both of us, as all this was set up to pay back properly in another year, not nice to make the goodbye call on someone i have known a good long time. Anyhow, despite my words, this is not “high finance”, big numbers style, or anything like that which I deal with, but very plain things on a quite human scale. Nevertheless, the mechanics are just the same.

How much is Luca still involved in running Ferrari? What effect will it have on the team and the company if he leaves?

When Berlusconi was elected, it was thought that there at last, was a businessman who could organise, but he found that politicians are not employees and do not do what they are told, so he gave up and became a playboy instead. Luca is of an entirely different personality, is it strong enough to lead a country, let’s hope so, Italy could do with some good governing and a stable regime, it may well take 10 years yet before the effects of the current recession have been completely reversed.

Not covered in your digest, but worth a read: the lawsuit filed by Tavo Hellmund against his Texas partners. Gems: “the site of the racetrack itself required millions of dollars in unexpected costs. [Partner and financier] Epstein, one of the prior owners of the site through a real estate venture, did not disclose its negative soil conditions, which cost significant amounts of remediation to safely support the circuit. Additionally…gas lines…were anything but easy or cheap to remove, costing several million dollars to relocate”. http://www.autoweek.com/assets/pdf/CW7848635.PDF

why did bernie not like campbell – because he was a CVC man? Or did he try and change things around a bit – his CV is pretty impressive! From what i’ve read, running allsport was quite lucrative, and not a position that would be easy to walk away from…